Mexican president trumpets investment to allay doubts over economic management

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MEXICO CITY (Reuters) - Mexico’s president on Thursday said his country had received $10 billion in foreign direct investment (FDI) during the first quarter of 2019, seeking to allay doubts about his economic management and concerns over the risk of a ratings downgrade.

FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador gives a speech during the inauguration of the Aerospace Fair 2019 at the Santa Lucia military airbase in Tecamac near Mexico City, Mexico April 24, 2019. REUTERS/Henry Romero/File Photo

Preliminary data published by the economy ministry showed FDI was $10.16 billion in the January-March period, up 7% from a comparable estimate for the same quarter last year.

The ministry published the estimate shortly after President Andres Manuel Lopez Obrador revealed the investment figure during his regular morning news conference to underline that the Mexican economy and its finances were in “good health.”

The veteran leftist, who assumed the presidency in December, had been asked for his opinion on a recent report by investment bank JPMorgan that Mexico faces a significant risk of a downgrade to its creditworthiness in the coming months.

Published Monday, the report on Latin America titled “Time to Take Profits on Mexico,” said there was “over a 50 percent probability” that Mexico’s sovereign rating would be downgraded at least one notch by at least one rating agency in 2019.

JPMorgan highlighted several risk factors for the Mexican economy, making particular note of the health of state oil company Pemex, which is carrying $106 billion in financial debt.

Last week, Lopez Obrador said Pemex would take charge of the planned construction of what would be Mexico’s biggest refinery, amid warnings from analysts that the facility would be costly and did not make economic sense.

Mexico’s economy has been sluggish, contracting 0.2 percent during the first quarter from the October-December period, according to preliminary data.

Still, Lopez Obrador said investors had faith in Mexico and that rating agencies were free to make their decisions.

This week, the government presented a package of measures aimed at shoring up Pemex, though doubts persist about the company’s financial position.

Lopez Obrador noted the government had decided not to use a stabilization fund to support Pemex. The fund, he added, contained around 300 billion pesos ($15.73 billion).

The president also stressed that he would hold down Mexico’s debt during his administration, which ends in 2024.

“The debt won’t increase in real terms,” he said, “and not just this year, in the whole six-year term.”

Reporting by Dave Graham; Additional reporting by Noe Torres; Editing by David Gregorio and Bernadette Baum